Left, Right, And Wrong

Oh, the Era of Good Feelings. Those were the days. We’re talking 1817 to 1825, the Administration of James Monroe. The appellation, though partly ironic, refers to how the decline of the Federalists effectively left the nation with just one political party, the Democratic-Republicans, who, without an opposition, had to settle for finding opposing points of view among themselves. There were plenty, and before long two parties emerged out of one, the National Republicans (later the Whigs) and the Democrats, and there ensued an Era of Bad Feelings, nearly two centuries long.

The latest bummer, of course, was the debt-limit showdown, a seemingly peerless episode of cynical self-immolation, ideological piety, and brinkmanship. As the battle wound down last week, a befuddled citizen, awaiting word of Senator Ted Cruz’s next move, received, out of the blue, a copy of a new book entitled “Wrong,” by Richard Grossman, a professor of economics at Wesleyan. It is a survey of nine economic-policy disasters from the past two hundred years. This wasn’t exactly the Swimsuit Issue, and nine seemed a weird number, as if the author had left room for one more disaster T.B.D.: perhaps government default, or, if you’d prefer, crushing entitlement obligations. But, after weeks of people everywhere calling other people wrong, the title’s bluntness hit a nerve, and the citizen soon found himself reading the third chapter, about the United States’ checkered attempts to establish a central bank.

Of special interest was Andrew Jackson’s campaign against the Second Bank of the United States, the heir to Alexander Hamilton’s short-lived first version and a precursor to the Federal Reserve. The Bank War pitted the agrarian heartland populism of the Jacksonian Democrats against the self-serving pragmatism of the financial and political élite. Jackson won. He killed the bank. Was this good or bad? Historians, like voters, tend to pick sides on the basis of their sympathies and their priorities. Grossman, who’s neither an ideologue nor an extremist, holds that the absence, in the next eight decades, of a central bank, as a moderator of credit and a lender of last resort, hamstrung America’s growth and exacerbated a host of panics and crashes, including one just months after Jackson left office. “Thomas Jefferson opposed the First Bank of the United States in 1791, on ideological grounds, but twenty years later he reversed his position, because he saw how useful the bank had been,” Grossman said last week. “By contrast, Jackson experienced the relative stability engendered by the First and Second Banks and the crisis-prone years between them. Nonetheless, he ignored the data and followed his ideological leanings. And, because he did, the United States spent the next three-quarters of a century going from crisis to crisis.” A national economy without a central bank: wrong.

While the citizen read, an e-mail arrived from a libertarian friend, a former student of Eugene Fama, the efficient-markets proponent, who won the Nobel Prize in economics last week. The libertarian, a boastful ideologue, had supported the congressional insurrection. In his view, Obamacare is an unaffordable abomination, and to do away with it he’d gladly see the United States default, faith and credit be damned.

The e-mail, with the subject line, “Andrew Jackson would be proud,” linked to a Journal op-ed column that likened Ted Cruz to Old Hickory: “The tea party is Jacksonian America, aroused, angry and above all fearful, in full revolt against a new elite.”

The trope of Andrew Jackson as Tea Party President goes back a few years. In this analogy, America’s long-standing economic regimen—easy money from the Federal Reserve, the dollar as a de-facto global reserve currency, big deficits serviced by cheap debt—is a natural descendant of the Bank of the United States. Its Tea Party enemies, who distrust the Fed, decry the size and cost of a big government, and apparently don’t care if all that debt is no longer so cheap, are, like the Jacksonians, bent on its destruction, whatever the consequences. They’d lop off the nose to spite the face.

Several years ago, before there even was a Tea Party, the satiric musical “Bloody Bloody Andrew Jackson” made Jackson out to be a kind of emo Tea Party populist, in tight jeans and eyeliner, that, come to think of it, brings to mind Ted Cruz. After Jackson takes down the central bank, he consolidates his power, and the chorus sings of him, in a number called “Crisis Averted”:

He’s taking a stand (yea, taking a stand)

And the best part is

Everything he says is right.

Wrong? ♦

Nick Paumgarten has been a staff writer for The New Yorker since 2005.